Four Types of Agreements

Single Unit

This provides you the opportunity to own or operate one location if it is for a retail store or for a territory the size determined by your mutual agreement.

This is the simplest form of franchise ownership.

2

Multiple Units

Successful franchisees often look to buy more than one franchise unit. It’s not unusual for a franchisee whose first unit proves profitable to sign a second or third agreement for other one or two locations.

Sometimes the franchisee when they sign the original agreement will ask and get an option to buy another location in a determined time frame.

3

Area Development

Some people decide they want to build more than one unit at the time when they sign their franchise agreement. Instead of signing just a single unit agreement each time he’s ready to begin his next development process, the franchisee can protect his rights to build a number of units in a particular geographic area by a set date and time.

Franchisees pay a fee for developmental rights and the agreement will include a schedule for building those additional units. The franchisor could cancel the agreement if the franchisee fails to meet the schedule.

4

Master Franchise

Sometimes called the ‘Mac Daddy’ of the franchising world. The franchisee gets the right to develop a certain number of units within a geographical area. He also gets the right to sub franchise or sell the franchise to other franchisees. There are similarities to the area developer and one major difference.

As a sub franchisor he sells the franchise rights to other franchisees and he trains and supports these sub franchisees. Although this is an expensive endeavor the potential is huge. The sub franchisor will pay a large fee for the rights but he recoups his investment over time as he sells franchises and shares royalties with the corporate franchisor. The acronym “OPM” – other people’s money is what helps someone build a huge business.